An Introduction To Market Segmentation

Introduction

This is a marketing term wherein the aggregation of prospective buyers into groups with the same needs and same responses to different items, known as market segmentation, allows the companies to target all varieties of consumers. This process helps the organization to target prospect consumers who understand the full value of the product and their services and also understands the difference from others that are present in the market. There are generally three broad categories that can be used to identify these different market segments which are as follows:

• Homogeneity which is the common needs within the segment
• Distinction which is the unique needs from the other similar groups
• Reaction is the similar response to the market

Why to segment a market?

There are several reasons as to segmenting the market and these are given below. Each customer have different needs and therefore making the offers accordingly makes more sense.

• Different customers will have different disposable incomes and therefore they will be sensitive to the price. With the help of this process, the business can assert prices that are more suitable.
• With the help of market segments, the businesses can grow.
• It helps in retaining the customers as for each customer, the circumstances change and so does their buying patterns.
• Only when the market is segmented appropriately can the business deliver accurate message to the prospect consumer audience.
• Unless it is the biggest player in the market, it is difficult to have the maximum profitability. With a better understanding, the market segments can be targeted better.

Benefits of segmentation

With the proper market segmentation process, the focus of the company lay on the correct segments and with better focus, the returns are greatly improved. Once the focus in improved, the competitiveness of the business also improves which will also work towards improvement of the market share. With this the company can expect better brand loyalty, the competitiveness increases with a holistic view. The next benefit of this market segmentation is market expansion where the company identifies the places where they can expand. If the market strategy is according to geographic locations, chances are that the brand will also expand in the nearby places. Lastly, with the market segmentation process, customer retention is much higher. All this leads to one thing only and that is improved bottom lines which all companies seek and demand.

Criteria for market segmentation

If it’s an ideal market segment, it will meet the following criteria.

• It will be measurable
• It will be large enough to earn the requisite profit
• The market will be stable as not to vanish after some time
• With the help of promotion and distribution channel, potential customers can be addressed
• Externally it will be heterogeneous in nature
• It will respond in similar manner to the external stimulus
• It helps in decoding the

marketing mix

• It is reachable with market intervention although in affordable manner
• Helps in identifying the prospect customers
• With the help of this, sufficient data for the sales approach can be accumulated

Conclusion

Businesses should learn to target the prospect customers and only then can they walk away with profits and a better sustainability in this dynamic market.

This article has been compiled by sam g, who is an educational instructor.